What is Bitcoin?
Bitcoin (sign: BTC) is a decentralized digital currency based on an open-source, peer-to-peer internet protocol. It was introduced by a pseudonymous developer named Satoshi Nakamoto in 2009.
Internationally, bitcoins can be exchanged by personal computer directly through a wallet file or a website without an intermediate financial institution. In trade, one bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places.
Bitcoin does not operate like typical currencies: it has no central bank and no central organization confirms nor controls its transactions. Instead, bitcoin relies on a peer-to-peer network of servers to broadcast and confirm transactions. The money supply is automated by a set algorithm implemented by all participating servers.
Specifically, bitcoin’s transaction log is authenticated by hashed ECDSA digital signatures and confirmed through resolved SHA256 hash functions of varying computational difficulty. Each time miners solve these hash functions and confirm a 10-minute portion or “block” of the transaction log, an assigned money supply is earned by the applicable miners along with any paid transaction fees. The amount of bitcoins issued decreases with time: Currently, 25 new bitcoins are awarded to servers with every 10-minute block. This will be halved to 12.5 BTC during the year 2017 and halved continuously every 4 years after until a hard limit of 21 million bitcoins is reached during the year 2140.
Bitcoin is the most widely used alternative currency. As of March 2013, the monetary base of bitcoin is valued at over $1 billion USD. The large fluctuation in the dollar value of a bitcoin has evoked criticism of bitcoin’s economic suitability as a currency.
– Source: http://en.wikipedia.org/wiki/Bitcoin
Bitcoin virtual currency hitting the mainstream
Foundation of Utopian economy or ‘trading tulips in real-time’?
With $600 stuffed in one pocket and a smartphone tucked in the other, Patricio Fink recently struck the kind of deal that’s feeding the rise of a new kind of money — a virtual currency whose oscillations have pulled geeks and speculators alike through stomach-churning highs and lows.
The Argentine software developer was dealing in bitcoins — getting an injection of the cybercurrency in exchange for a wad of real greenbacks he handed to a pair of Australian tourists in a Buenos Aires Starbucks. The visitors wanted spending money at black market rates without the risk of getting roughed up in one of the Argentine capital’s black market exchanges. Fink wanted to pad his electronic wallet.
In the safety of the coffee shop, the tourists transferred Fink their bitcoins through an app on their smartphone and walked away with the cash.
“It’s something that is new,” said Fink, 24, who described the deal to The Associated Press over Skype. “And it’s working.”
It’s transactions like these — up to 70,000 of them each day over the past month — that have propelled bitcoins from the world of internet oddities to the cusp of mainstream use, a remarkable breakthrough for a currency which made its online debut only four years ago.
When they first began pinging across the Internet, bitcoins could buy you almost nothing. Now, there’s almost nothing bitcoins can’t buy. From hard drugs to hard currency, songs to survival gear, cars to consumer goods, retailers are rushing to welcome the virtual currency whose unofficial symbol is a dollar-like, double-barred B.
Advocates describe Bitcoin as the foundation stone of a Utopian economy: no borders, no change fees, no closing hours, and no one to tell you what you can and can’t do with your money.
© The Associated Press, 2013
Bitcoin Mythology: Red-herrings and Bullshit
My conclusions will be drawn from a biased perspective – mine. All opinions/views are biased and I hope you have learnt to describe yours as I believe the writing here describes mine. Let’s commence with an examination of the monetary metal.
Gold, Silver, Copper
If you believe it was through accident, fate, or manipulation that the market places throughout the world and throughout known history have preferred physical monetary metal in the form of gold, silver, and copper then you are quite delusional.
Through much trial-and-error with numerous mediums-of-exchange such as seeds, paper, tally sticks and other forms of currency, it was discovered by practically every culture in existence that a functional market place required something that was long-lasting, easily recognised, and easy to transport around. Over time, and throughout the world, an enormous amount of gold, silver, and copper has been forged into coins and bars to facilitate trade between individuals, groups, and eventually nation states. This isn’t an accident that occurred through chance, it happened for the simple reason that gold, silver, and copper in physical form have been the best medium-of-exchange since time immemorial.
Platinum and palladium have rarely been used since they were discovered relatively late, and because, more importantly, they are difficult to distinguish from silver. I state above that the market place naturally craves a currency that’s ‘easily recognisable’ and as a thought experiment please place a gold coin next to a silver one next to a bronze/copper one. They are easily distinguishable from each other and have provided many market places with a functional currency for items ranging from luxury items such as grand palaces to basic purchases such bag of potatoes. If there’s an item for sale, one of the monetary metals can easily provide the medium-of-exchange.
To deny gold, silver, and copper are the ‘Kings of currency’ is to state that all our history books are incorrect – which may have an element of truth to it J – but not in this context.
The mistakes in the past have been to ‘fix’ the value of gold, silver, and copper in relation to each other, and in a nominal format. Hopefully we won’t do that again and instead utilize the monetary metals on two basic principles: Purity and weight.
Binary code and perception of fiat
We’re starting to hear more-and-more about Bitcoin as time goes on and the contemporary monetary system shows increasingly obvious signs of weakness and vulnerability to collapse.
Those that encourage you to utilize the new cyber-currency called bitcoin may be well-intentioned, and indeed many bitcoin advocates are also monetary metal enthusiasts. Although there is a strong suspicion for some regarding bitcoin, I’m philosophical towards it, although I must stress that I have no interest in it myself.
However, as many have stated prior to my rantings here, bitcoin is merely binary code and has no intrinsic value whatsoever. Furthermore, it would appear to have pseudo-PONZI scheme qualities in which the early adopters are rewarded and the later-joining participants gaining less as time unfolds. Bitcoin has apparently increased in price by 2000% in two years; does anyone reading this believe this trend will continue?
In the early days of my awakening to the current monetary systems in play I frequently asked people around me the simple question, “How much of £sterling is in physical notes and coins?” I received a variety of responses with some believing that 50% is in physical form with the remaining being stored on a computer database – i.e. in binary code. I used to examine their eyes as the individual elaborated upon the simple fact that a mere three-per-cent of £sterling is physical with the vast majority simply being a virtual currency…….”A bit like a computer game” one person responded. “Yes, indeed” I replied.
Myth One: The public accepts digital currency is a good thing
I would imagine if a large percentage of the population realised their wealth was in the format of intangible fiat currency, there would be a global bank-run in a matter of days. Although our contemporary currency system has functioned like this for some time, it has worked without the general population being aware of the facts. I would also assume most folk believe their currency is stored 100% in paper at the bank, an assumption about to be proved fatal for many throughout the euro zone area.
The criminal elite have a wet dream regarding a ‘cashless’ society and are continuously attempting to implement one without success to date. This is because the vast majority of people have a psyche in the concrete and not in the abstract. Bitcoin, being an intrinsically-worthless and abstract currency will not be adopted by the general population, and I personally believe that the majority of folk currently paying attention to its progress are doing so for one purpose alone – greed and the chance of making a profit.
Myth Two: Bitcoin is a store-of-Value
People often use the shipwreck example to explain the notion that gold and silver are a store-of-value. In essence, it’s simple: A ship sinks in the year 1713 with one-hundred gold sovereigns and two-hundred silver florins on board. In 2013 the ship is discovered by a team of deep-sea divers who bring the stash up to the surface. Has the gold and silver ‘stored’ value? The answer is of course, yes, and not only that they will probably have a ‘premium’ over their intrinsic melt value due to numismatic qualities. What would happen to your ‘bitcoin wallet’ three-hundred years from now, or even 6000 years from now? Yes, there are coins from 6000 years ago made of electrum in museums that have a basic melt value. Bitcoin also requires a computer and electricity to function, which sounds, to me ate least, like a massive assumption of conditions. Without a computer and electricity bitcoins revert to their intrinsic value of worthlessness.
Myth three: Silver has no intrinsic value
This myth of nonsense has been thrown-around by those that really should know better, and I’m extremely suspicious as this myth is used in correlation with the promotion of bitcoin. Let us review the exact words again to put this myth to bed once-and-for-all.
Intrinsic: belonging to a thing by its very nature: the intrinsic value of a gold ring.
Value: relative worth, merit, or importance
Those that are perpetrating the myth that silver has no intrinsic value are attempting to get you to reason that all value is perceived…..a flip on the saying, “beauty is in the eye of the beholder” into, “value is in the mind the beholder”. This is partly true, and, after all, most bullshit has an element of truth to it otherwise it wouldn’t work.
Most DTOM readers will be aware of the wealth cycle principle and ratio investing, and will not be surprised nor enlightened with the concept that there is an element of the human psyche involved when examining value. However, I refer you to the definition above which specifically states ‘relative worth, merit, or importance’. Relativity is independent of the human psyche. For example, there is relativity in the gravitational pull of planetary bodies; a phenomenom that existed before humans, and I dare suggest such relativity will exist long after our species meets the same fate as the many species before us.
Silver has intrinsic value/importance regardless of whether the human mind knows of its existence, just like oxygen has intrinsic importance prior to human kind discovering the properties of the air around us. To suggest otherwise is either intellectually thick-as-pig-shit, or, as I chiefly suspect, the mind or minds of those with an agenda to promote ‘value’ in an intrinsically worthless entity such as bitcoin. Those that fall into the latter category should be fully ashamed of themselves, shunned by the other awakened folk, and have their nonsense challenged for all to see.
Myth Four: Bitcoin is anonymous
Trace Mayer recently appeared on a BBC Newsnight interview to pump the credentials of bitcoin to the British public. Accompanied by Mr Knowles, a shill from the Rothschild-controlled Economist, Trace and the shill debated for a few moments. You can review the interview for yourself by clicking here.
Trace was reasonably honest and stated he uses bitcoin as a medium-of-exchange to circumvent the banking sector, and conceded that it is indeed a speculation/investment to make a move into bitcoin.
After the interview Trace addressed some of the topics discussed, and one of the arguments the Economist’s shill made was that bitcoin could be used for money-laundering, i.e. he was stating the myth that bitcoin is anonymous. In response, Trace wrote:
“Additionally, all transactions are permanently stored in the blockchain which anyone can review. This leaves a tremendous amount of digital footprints that a competent forensic accountant can follow.”
“Consequently, I think Mr. Knowles is attributing to Bitcoin’s censorship-resistant nature a property which it does not have. Just because a payment cannot be stopped does not mean it cannot be traced.”
So there you have it from one of the most knowledgeable people on the bitcoin operations system. Clearly, although there are no capital controls obvious to TPTB stopping a transaction in bitcoin occurring, they could if they so wished find out what coins are being used for what, where, and by which computer ISPN.
Myth Five: Bitcoin is immune to the powers of the Banking Cartel
I’m not going to comment too much on this particular myth but would like to stress: Are you fucking kiddin’ me?
Are you seriously trying to tell me that TPTB in the western world, the same self-professed elite that had the ability to pay programmers to design STUXNET can not, if they so wished, pay the best computer experts to completely sabotage the existence of bitcoin?
Like I stated: Are you fucking kiddin’ me?
Physical monetary metals have served the market place for millennia in various regions around the globe. This is due to a process of trial-and-error with a variety of currencies with the outcome being the metals gold, silver, and copper becoming the ‘Kings of monetary history’.
Unlike bitcoin, gold silver and copper have intrinsic value outside of the human consciousness and although the human psyche does have a ‘value in the mind of the beholder’ effect on the monetary metals their value is not solely derived from such contemplation. Bitcoin, on the other hand, is digital binary code with zero intrinsic value similar to digital government fiat currency.
The majority of humankind operate in the concrete rather than the abstract, and that is an explanation as to why TPTB have so far failed to implement their wet dream of a cashless society and computer-only currency transactions. Bitcoin will meet the same reception from the general population……especially as the anger stage moves up a gear due to events in the euro area.
People will want to hold tangible wealth.
There are a few myths surrounding bitcoin and it is wise for anyone considering its usage to consider why they are interested in acquiring some:
Is it for profit? How much longer will it rise?
Is it for an international medium-of-exchange? The world is returning to localism, is it not?
Is it for confidentiality? Trace Mayer states quite clearly there is a paper trail – or in this case a ‘binary code trail’.
But hey, it’s up to you if you want to speculate on whatever and whenever. As I stated at the start of this article we are all biased and my bias motivated me to write this piece. The thing that pissed me off was the utter bullshit being peddled about that “silver has no intrinsic value.” If you genuinely believe that then you’re an intellectually pygmy not worthy of debating my 7-month-old son J
As always, keep safe and good luck. Keep stacking that physical monetary metal – especially silver – and keep your wits about you as more-and-more shills and red-herrings will be released/unleashed as we go deeper into the collapse.
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